The BMP pathway is universally important in multicellular organisms and is known to regulate proliferation, patterning, cell fate and other fundamental processes in model systems. Its components are evolutionarily conserved, and pathway dysfunction leads to human diseases of the skeletal, vascular, and gastrointestinal systems as well as predisposition to colorectal cancer. Work in Drosophila has contributed greatly to our understanding of the molecular mechanisms for signal transduction and its regulation, particularly in the study of the pathway in vivo. We have discovered that Lilipod, an uncharacterized but evolutionarily conserved transmembrane protein of the Lipocalin-receptor family, plays a role in BMP signaling in different contexts and we provide extensive evidence of its contribution to germline stem cell (GSC) self-renewal in the ovarian niche. We have also identified fly Fabp, a protein of the fatty-acid-binding family, as a potential ligand and modulato of Lilipod. Vertebrates have two Lilipod orthologs and at least three Fabp orthologs. Given a high degree of aa sequence conservation (similar to other pathway components), Lilipod/Fabp's role in BMP signaling is likely to be conserved. The multiple Lilipod and Fabp orthologs are broadly expressed in vertebrates and may function sometime redundantly, as well as show pleiotropy given the many roles of BMP; thus, complicating studies in vivo. Drosophila is an ideal model to study Lilipod and Fabp function because it has i) only one lilipod and fabp gene, ii) powerful molecular genetic techniques for loss/gain-of-function analysis in vivo, and iii) a wealth of BMP-pathway (Dpp) reagents for both in vivo and insect cell culture models. We show that lilipod is expressed in GSCs; it is necessary and sufficient for their self-renewal; and it regulates BMP signaling in these cells. For this proposal, we will elucidate the molecular mechanism of Lilipod action by first using an in vitro system (S2 cells) and then testing emerging models in vivo (in the ovarian stem cell niche). In addition, we will also dissect the function of its putative ligand Fabp in vivo and in vitro. Based on our preliminary data, Lilipod's input into the signaling cascade occurs between the receptor Tkv and the activated R-SMAD pMad. Preliminary experiments suggest a direct interaction between Lilipod and Tkv in vivo and a requirement for lilipod in the transduction of the BMP signal in S2 cells. A detailed biochemical analysis of the effect of loss/gain of lilipod in S2 cells will assess the stability, binding and/o activation properties of various BMP signaling components in the presence and absence of Lilipod (Aim 1). The emerging molecular mechanism will then be tested in vivo (Aim 2). In Aim 3, we will investigate the function of Fabp in the germline niche and its role as a putative Lilipod ligand. Preliminary experiments suggest that fabp is required and sufficient in the germline niche to promote the stem cell state; an Fabp isoform directly binds to Lilipod; and a reduction in Fabp level (using a deficiency) impairs Lilipod's function. We will dissect fabp function in vivo (germline niche) and in vitro (in S2 cells) using advanced genetic approaches and biochemical techniques (Aim 3).